DEA, SANParks & SA Weather Service 2017/8 Annual Reports

Environment, Forestry and Fisheries

10 October 2018
Chairperson: Mr M Mapulane (ANC)
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Meeting Summary

Annual Reports 2017/18

The Committee was briefed on the annual reports of SANParks and the South African Weather Service (SAWS), entities of the Department of Environmental Affairs (DEA), for the 2017/18 financial year. 

The key message from the Auditor General of South Africa (AGSA) was that there had been a general regression within the DEA. SANParks and SAWS had received unqualified audit opinions with findings from the AG.  SANParks had material findings on performance information and non-compliance with legislation. SAWS had material findings with regard to circumventing competitive bidding processes, data management, and irregular and fruitless expenditure.

SANParks was in a healthy financial state, with its total revenue exceeding total expenditure. However, it had difficulty in achieving its fundraising target, and was struggling to meet its gender transformation targets for women in the organisation, and in management. The Committee was impressed the presentation in the main, but expressed concern regarding the findings of the AG.

The SAWS presentation on its annual report was delayed while the Committee interrogated the reasons for the suspension of the Chief Executive Officer. The meeting was told that matters involving the lease of the entity’s new building and a couple of other issues had been reported to the audit committee.  A board meeting had been held and a decision had been taken to place the CEO on precautionary suspension.  There would be meeting later in the day to discuss the matter and assess the legal opinion.

SAWS’ total assets had increased by 5%, with their account receivables also increasing. They had only partially achieved their gender transformation targets, citing a scarcity among women of the specialised skills required. They announced their accelerated skills programme to correct this, however. The Committee believed that SAWS could return to receiving a clean audit opinion, but stressed that this could be achieved only with greater stability at the helm of the entity. 
 

Meeting report

Chairperson’s opening remarks

The Chairperson said the Auditor General’s (AG’s) report pointed to a regression within the Department of Environmental Affairs (DEA). He asked SANParks to supply the Committee with a management report.  He also pointed out that the AG’s view was that there had also been a regression in the Committee and its duty to exercise oversight.  Moving forward, the Committee would be meeting more frequently with entities under the DEA.

SANParks annual report

Ms Tasneem Essop, SANParks board member, said she was attending as a representative of the entire board, and was newly elected to this role. She conveyed the condolences of the SANParks team with regard to the passing of Minister Edna Molewa. The SANParks board had been newly elected by the late Minister in August of this year. Two members of the previous board were re-appointed, as well as the chairperson, Ms Joanne Yawitch. She stressed that the current board was committed to continuing the work of the previous board of members.

Mr Fundisile Mketeni, Chief Executive Officer (CEO): SANParks, put forward the mandate of the entity which was to develop, expand, manage and promote a system of sustainable national parks that represented biodiversity and heritage assets, through innovation and what was best for the just and equitable benefit of current and future generations.

While the CEO was reading out strategic goals of SANParks, the Chair interrupted to ask that presentation be fast forwarded to the section regarding the performance information. The CEO agreed.

Strategic Objective One: Improved Representative Conservative Estate

Under the performance indicator, ‘Total area added to National Parks’, SANParks had targeted 3 715 ha of land to be included in the system of national parks, and had managed to acquire 3 847 ha to the Tankwa Karoo National Park.  This property comprised succulent karoo and fynbos vegetation types, both being under-represented. Under the same performance indicator, SANParks participated in all Phakisa task team activities towards the declaration of Marine Protected Areas (MPAs).

Under the performance indicator, ‘Reduction of fossil fuel generated energy consumption,” a baseline was determined by the following national parks: Mokala, Golden Gate and Mountain Zebra. The energy audit report was approved by EXCO.  Under the same performance indicator, a 2.22% increase in fossil fuel generated was reported at the Kruger National Park. The target had been a 2% reduction in the baseline for the park. The CEO attributed the increase to the heat which affected their generator and regenerator systems. The CEO assured the Committee that the matter was under control. 

Strategic Objective Two: Effectively Managed Ecosystem, Species and Cultural Heritage Assets

Under the performance indicator, “Total Hectares of Land Rehabilitated’, SANParks had targeted 38 537 ha of land and achieved 44 519 ha of land. Under the same performance indicator, they had overachieved their target, following up on 199 484 ha of land. This was attributed to good rains in the Kruger National Park after an initial dry period.

Under the performance indicator, ‘% Increase in SANParks Environmental Management Inspectorate (EMI) fines and arrests for key species,” the target for fines had been a 2% increase, but there had been a 13.9% reduction. With regard to arrests, the target was a 2% increase, and there had been a 32% reduction. The CEO explained that these figures were not completely negative, as the reductions could be attributed to more people obeying the law and not poaching illegally. 

SANParks had developed a ‘sustainability threshold’ performance indicator with a view to determining the threat of extinction. Rhinos, elephants, cycads, and penguins were identified as threatened. SANParks had achieved on all their threshold margins.

Strategic Objective Three: Enhanced knowledge for decision making

Under the performance indicator, ‘research projects,’ SANParks had managed to meet their target of 75%, with 79.6% of all registered projects being classified as either essential or important to SANPark’s knowledge needs. Moreover, the annual target for peer-reviewed SANParks’ research publications was achieved. The CEO brought specific attention to the International Savannah Science network event in Kruger National Park and the Koedoe Journal, which celebrated 60 years in circulation.

Strategic Objective Four: Enhanced Tourism Returns

Under the performance indicator, ‘Gross Operating Tourism Revenue,’ SANParks had managed to meet their target of a 10% increase, with an actual performance of 12.5%. The total number of visitors to national parks had increased from 6 664 996 to 7 004 213. There had been a growth in black visitors, and SANParks had achieved the targeted performance of a 4% increase, with the actual performance of 5.8% (42 619 to 45 084). However, the AG had disagreed with SANParks’ approach and had recommended that all visitors specify their race, and the utilisation of source documents. SANParks had taken the approach that, in the descriptor, data would be based on observation only. The CEO mentioned that there would be further comment on this during their presentation.

The Customer Satisfaction Index was at a satisfactory 80.5%, despite the 1.3% point decline.

Strategic Objective Five: Diversified and Enhanced Tourism Opportunities and Experiences

Under the number of revenue-generating products, SANParks had developed 14 products in order to diversify and to obtain more returns on these kinds of products. These included the Kranshoek Gorge Zipline, Selati Bridge accommodation and Kgalagadi Nossob luxury camp sites.

Nine parks had been highlighted under ‘park visitor management and interpretation plans implemented.’

Strategic Objective Six: Optimised Contribution to the Green and Blue Economy

Under the performance indicator, ‘Full-time Equivalent Jobs Created,’ SANParks had achieved 7 109. It had targeted 690 small, medium and micro enterprises (SMMEs) to be supported, and had achieved 733. The rand value spent on the SMMEs was R231 million. Under the number of social legacy projects implemented, it had been focusing in the last four years on building science laboratories. Three had been implemented, and the remaining two at Albert Myburg High School Science lab, near Agulhas National Park, and Matsila Village Science Laboratory, were scheduled for construction to begin in January 2018.

Strategic Objective Seven: Enhanced Awareness and Skills

SANParks had not achieved the annual target of 218 000 participants in environmental education programmes, recording only 139 668 participants. The CEO said the difficulty of achieving this target was that the school calendar did not coincide with the SANParks calendar.

It had targeted 80 000 free access entrants during the SANParks Week and other planned events, and had achieved 77 340.

Strategic Objective Eight: Enhanced Stakeholder Engagement

SANParks had achieved its targeted number of proactive media engagements. It had a 100% record in responding to Promotion of Access to Information Act (PAIA) requests within time frames. The CEO added that the Parks Week had grown by a further 25%.

Strategic Objective Nine: Adequate, Appropriately Skilled, transformed and diverse human capital

Regarding employees from designated employment equity (EE) groups, the CEO said that SANParks was experiencing challenges, especially regarding female representation in management positions. Currently SANParks was at 38.5%. In the new annual performance plan (APP) their goal was 42%. Furthermore, SANParks would be implementing a five year plan to address this matter. There had been improvements in the extent to which people with disabilities were represented.

SANParks had not met the target for employees meeting minimum educational requirements, achieving 71% against a target of 75%. The percentage ‘spent on the Skills Development Programme had been a challenge for SANParks, but it had met its target of 1%, its actual performance being 1.48% (R14.4 million). The CEO explained that SANParks was also investing in leadership development, with 56 young managers being sent to university.

Strategic Objective Ten: Conducive Working Environment

Under the performance indicator,’% Success rate at the Commission for Conciliation, Mediation and Arbitration (CCMA)’, SANParks had achieved 100%, with the CEO remarking that this was a proof of fairness in SANPark’s disciplinary processes.

Strategic Objective Eleven: Optimised Business Processes and Knowledge Management Systems

The targeted number of business processes reviewed had been achieved. The information communication technology (ICT) strategy was in place to achieve a greater level of integration, automation and becoming a paperless entity. The Chief Operating Officer (COO) would go into further detail later in the presentation regarding this. He commented on the need to improve IT, with emphasis on the gates’ system, as there were usually long queues.

Strategic Objective Twelve: Accountable Corporate Governance

SANParks had received an unqualified audit opinion. It had achieved its targets for compliance with the shareholder and National Treasury requirements, and in terms of the submission of its documents on time.

Strategic Objective Thirteen; Financial Sustainability       

Under the performance indicator, ‘Average number of days: Debtor Collection’, SANparks took 43 days to collect cash from its debtors. Their target was an average of 30 days. With regard to creditor payment, it took SANParks 25 days to pay. The CEO referred to a concessionaire who owed SANParks approximately R4 million, and assured the Committee that they had already begun the legal process to resolve the matter.  SANParks had fundraised R34.7 million, which left them short of their target of R50.4 million. The CEO promised improvement in this sector.

Mr Dumisani Dlamini, Chief Financial Officer (CFO): SANParks, said the entity was financially healthy. The balance sheet indicated a situation where total assets had grown to upwards of R4.7 billion. Liabilities had also increased by 16%. The employee benefit obligation had increased from R496.5 million to R552.2 million. The current net worth of SANParks was R2.284 billion.

SANParks total revenue from exchange transactions totalled R2.012  billion, which was an increase from R1.821 billion in the previous year.

The revenue from non-exchange transactions were primarily received from government grants that were received on an annual basis. The CFO remarked that he believed that the grant from government would continue to decrease due to the current strains facing the fiscus.  Third party donor funding was used for specific purposes.

Expenditure for SANParks had increased to R2.371 billion, an increase of 9% from the previous financial year. The CFO attributed this to the expansion of SANParks and the increase in employee-related costs. Although expenditure had increased by 9%, revenue had grown by 10%, which reflected a positive trend.

For the year under review, SANParks had realised a surplus of R202 million.

AGSA’s findings

SANParks had received an unqualified audit opinion in the 2017/18 financial year. The AGSA had found that although the financial statements of SANParks were free from material misstatements, there was a need to emphasise a material provision for impairment and restatement of corresponding figures.

The first matter was with regard to the growth in the total number of local black visitors. The AG had disagreed with SANParks’ approach and had recommended that all visitors specify their race and the utilisation of source documents as evidence. Due to this being a material finding, this disqualified SANParks from receiving a qualified audit. SANParks had taken the approach that, in the descriptor, data would be based on observation only.

The second finding related to growth in irregular expenditure, which was regarded as material non-compliance with the legislation.  The irregular expenditure was not related to the past financial year, but legislation requires that it be reported in the year in which it was discovered even though it happened in previous years.

The Chairperson asked for further clarity on the second finding.

The CFO clarified that the amount in question was R6 million, which was comprised of many transactions. Specifically, there was a tax clearance certificate that had expired. Further, there were transactions in which the contract approval amount had been exceeded and SANParks had continued to use the same service provider.

The Chairperson asked whether there would be a specific submission on the findings of the AG.

The CEO said that SANParks did not have a separate submission but would be willing to present on it if given time to prepare.

The specifics of the AG’s second finding were with regard to SANParks awarding of contracts without the having received a minimum of three quotations. There was an instance in which a contractor was awarded a contract without having the lowest quote, and a bidder was awarded a contract although they had not submitted a declaration which described their relationship to the state and the people employed by the state.

With regard the final transaction, the CFO said that they had sought assistance from the AG, as it was difficult to spot those who were untruthful on the form.

The Chairpersom sought more clarity on the findings of the AG.

The CEO suggested that SANParks could provide Parliament with the Management Interaction Report.

The Chairperson expressed displeasure at this information not being prepared already.

Mr Z Makhubele (ANC) expressing his concern that SANParks had not prepared a specific response to the AG’s unqualified audit.

Mr R Purdon (DA) suggested that in future, all annual reports must include findings from the AG. He stressed the importance of honesty.

The Chairperson asked about the corruption investigation that took longer than six months.

The CFO handed over to the CEO to give the background and context on what had led to the investigation. 

The CEO said that Howard Buffet, an American philanthropist, had donated R250 million to SANParks and delegated the Nature Conservation Trust to manage the funds. The basis of the investigation involved miscommunication between Mr Buffet, SANParks, the Nature Conservation Trust and the Sterling Committee. National Treasury had approved their request for a forensic investigation.

Overall, SANParks had achieved 72% of its goals, with 17% being off target and 11% being a work in progress.


Discussion

Mr Purdon remarked that the target of losing 400+ rhino losses was too high and should be zero instead. He suggested that their target should be reviewed. His second point was on the issue of black visitors to parks, asking for clarity on the context and history behind the performance indicator.

Mr Makhubele said that the presentation was slightly confusing in its structure.  He asked about the ageing infrastructure and how SANParks planned to respond to this. He commented on the general regression in the Department as a whole. The seven pillars of the transformation strategy had not been formalised, and he questioned the time frame of this action plan, as transformation was an important goal of the administration. He asked about the SANPark strategy to deal with rhino poaching and in which direction the current poaching trend was headed. He asked for further information on the legacy projects being run by SANParks, and expressed disappointment over SANParks not being able to achieve the target of 50% of women in management. Finally, he asked which mechanisms SANParks would implement to address their increased water consumption challenge.

Mr T Hadebe (DA) questioned SANParks on the water consumption issue. He asked what proactive measures could be implemented to avoid this challenge in the future. He referred to the AG’s material findings on black visitors, and asked whether they required visitors to state their race.

The Chairperson asked for a comment from a representative of the AG regarding SANParks’ claim that a finding of the AG was incorrect.

The representative replied that they had just become aware of the issue, and promised to provide a response once one had been formulated.

The Chairperson questioned the increasing liability from the benefits former employees received. He asked why it had been steadily increasing over the years and what could be done to control this? He also questioned the status of the height of the western boundary.


SANParks’ response

Mr Mketeni said that rhino poaching had been a significant issue since 2008. The amount of rhinos poached in that calendar year was approximately 188, but this number had peaked at 800 rhinos killed. It had since been steadily decreasing and had totalled 605 in the past year. Therefore the target of 400 was in line with the trend of poaching decreasing. The CEO added that the goal was for this number to be150 by the year 2020.

Mr Glen Phillips, Managing Executive: Kruger National Park, displayed figures supporting the decline of rhino and elephant poaching. He explained how despite the decline in poaching, the demand had increased and this evident through the spike in the increase of both poaching activities and arrests. The most important aspect was that the amount of species being poached should never exceed the amount needed to sustain the species, and the SANParks targets were an expression of that goal.

Mr Mketeni added that SANParks had to improve on crime scene management, and were currently engaging with the South African Police Service (SAPS) to better equip their rangers.

Ms Lize McCourt, Chief Operating Officer: SANParks, responded to the question about the lack of black visitors. She said that the black population had been historically excluded from the national parks system. Currently, the majority of overnight visitors remained white. SANParks was committed to the inclusion of all South Africans to the national parks system, exclusive of race. Furthermore, 73% of the tourism generated by the national parks was from local South African visitors whose demographic was ageing and white, so in order to increase revenue and tourism, SANParks was interested in breaking into the young black demographic. SANParks compiles these figures through observation and as a result, they cannot be verified. Observation was an accepted from of scientific research, but SANParks was sympathetic to the findings of the AG.  It was currently in discussion with the Minister’s office regarding how the impasse could be overcome. 

The CEO apologized for the confusing nature of the presentation, and promised to improve in the next annual report. He noted the general regression of the Department, and emphasised their goal to change this moving forward. With regard to the ageing infrastructure, SANParks would have to work closely with their accounting team to develop a finance model to improve the infrastructure.  This would be shared with Parliament soon.

Ms McCourt said that SANParks was committed to improve on matters of transformation and its seven pillars. She pledged that by March 2019, it would have achieved status quo on each one of the pillars and have the entire strategy completed by March 2020. Three projects had already been completed, and the remaining two were completed in the first quarter of the year.

On the matter of female representation, the COO explained that even if SANParks were to employ a woman to each vacancy in management, SANParks would achieve only a 41% level of women in management.  The main contributing factors to this were a lack of growth and vacancies in the SANParks establishment.

Ms Hapiloe Sello, Managing Executive: Tourism Development and Marketing, responded on the question of SANParks not achieving their fundraising target. She said that SANParks had seen quite an improvement from the previous financial year. However, the shortfall was due to a lack of capacity which they had resolved by making a senior appointment to the fundraising team. They would be presenting a new fundraising strategy to the board in January, and were confident of improved results.   

Mr Phillips addressed the questions surrounding water usage and consumption. He said that even during the drought, the rivers at Kruger National Park continued to flow, which was due to upstream management. Kruger National Park purifies the water from the rivers for human consumption and stressed that infrastructure was critical to improving this sector, as some pipes had been in service for 50 years.  

Mr Dlamini clarified questions regarding the post-retirement medical aid benefit. He confirmed that the liability was growing, but the calculation of the rates was done by third party actuaries. Factors such as an increased life expectancy were a contributing factor. He said that many employees took early retirement in 2016 which affected the amount as well. Finally the CFO explained that SANParks had been seeking legal opinion whether the benefits could be limited, the CFO stressed that this would have to be done delicately as many of the beneficiaries were unionized workers. 

The CEO said that SANParks was working with the landowners surrounding the western boundary. They were committed to have a new agreement by 1 December of this financial year.

Mr Phillips added that those landowners who did not sign would have to go through the regularisation with the assistance of SANParks, and named the parties which had agreed to the new contract.



South African Weather Service (SAWS): Suspension of CEO

The Chairperson commented that of the South African Weather Services (SAWS) delegation, he recognised only Dr Phillip Dexter, the deputy chairperson, who was in attendance at the previous meeting, and Ms Nana Magomola, the chairperson. He asked about the whereabouts of the CEO, Mr Jerry Lengoasa -- whether he was off sick or travelling.

Ms Magomola began by offering condolences to the Members and family of the late Minister Molewa. She said she was newly elected to her role, and apologised for not attending the previous meeting owing to an international business meeting. She expressed SAWS’ commitment to remaining a positive member of the state-owned entity group.  As an overview, she said SAWS had achieved 80% of their targets, partially achieved 8% and failed to achieve 12%.

She handed the presentation over to Mr Mnikeli Ndabambi, the acting CEO. 

The Chairperson interrupted to ask again as to the whereabouts of the CEO, Mr Lengoasa.

Ms Magomola said that the CEO had been put on precautionary suspension by the late Minister. 

Dr Dexter said that matters involving the lease of the new building and a couple of other issues had been reported to the audit committee.  A board meeting had been held and a decision had been taken to place the CEO on precautionary suspension.  He and the chairperson would be meeting further today to discuss the matter and assess the legal opinion.

The Chairperson expressed frustration at the frequency with which the SAWS board suspended its executive management.  This was all happening in light of the former CEO who had been ‘prematurely terminated by the board’.  He said that Parliament would be amending the report to enforce the SAWS board members to cover the legal costs of the termination. He asked rhetorically as to what was going on at the helm of SAWS, and expresses his worry about the organisation.  He said that prior to the passing of the Minister, there had been a scheduled meeting to review the SAWS board.

Ms Magomola promised that a report regarding the matter of the CEO would be supplied sooner rather than later.  She said that when the allegations against the CEO were tabled, the members of the board had been taken aback and were ‘in pain’. They had been dealing with the matter with the greatest discretion, and even members of the executive of SAWS were unaware of the nature of the allegations against the CEO. The relationship between the board and the CEO was not adversarial.

Dr Dexter added that the current matter was fundamentally different from that involving the previous CEO.

The Chairperson said it was unsettling that there was no written submission, and if he had not asked, the Committee would not have known the current situation.

Mr Purdon asked who the ‘he’ was to which Ms Magomola had been referring.

Ms Magomola said that the suspension was done by the Acting Minister of Environmental Affairs, Mr Derek Hanekom, on 14 September.

Mr Hadebe shared the Chairperson’s sentiment that as Committee Members, they were disappointed at the lack of communication.

The Chairperson said that ordinarily he would adjourn the meeting, but would allow it under protest.

 

SAWS Annual Report

Mr Mnikeli Ndabambi proceeded with the presentation of the SAWS annual report for 2017/18.

Strategic Goal One: Provision of Products and Services

Under theperformance indicator, ‘the number of community segmented products and services’, SAWS had achieved its target of maintaining five current products and services. Furthermore, it had introduced four new products and services which included extended range forecasts (alerts), a climate reference atlas, a fire danger index and corrected temperatures for forecasters.

Strategic Goal Two: Capacity and Capability Development

Under the performance indicator, ‘Percentage of Availability of Radar Data’, SAWS had not achieved its annual target of 80%. Only 72.17% of radar data was available during current year, with the operational performance of the radars being at 73.16%. In reaction to this, SAWS had created a radar business case which seeks to evaluate options available to SAWS to improve radar efficiency.   

Under the performance indicator, ‘Percentage achievement of Employment Equity (EE) targets as per the organisational EE plan’, SAWS had partially achieved their annual goals. With regard to the percentage of blacks and people with disabilities, SAWS had met its annual targets and only partially achieved their 40% and 42% mark of women in the core and management, their scores being 34% and 35% respectively. The acting CEO commented that the specialised skills required at SAWS were lacking amongst the female population. In an attempt to increase the achieved the mandated status quo, SAWS had created an accelerated skills programme that concentrated on females and people with disabilities.

Strategic Goal Three: Engaged Stakeholders

Under the performance indicator, ‘Percentage (increase) in traffic volumes on media platforms’, SAWS had achieved its target of a 10% increase.  It had specifically experienced major growth over social media platforms, with its Facebook and Twitter followings growing by 1 200% and 112% respectively. Mr Ndabambi attributed this to the global trend of weather forecasting entities utilising social media to broadcast updates and receive instant reaction from those on the ground.

Strategic Goal Four: Research and Knowledge/ Intelligence Creation

Under the performance indicator, ‘Number of peer-reviewed articles, conference papers and theses by SAWS scientists (cumulative target),’ SAWS released 47 such publications, with 36 being articles, one thesis and 10 conference papers.

Strategic Goal Five: Growth and Sustainability  

The only target not achieved under this strategic goal was under the performance indicator, ‘Growth in Aviation Revenue’. SAWS’s aviation revenue totalled R129.30 million, whereas their target had been R130.54 million. Mr Ndabambi reiterated the sentiment of Ms Magomola, that they would be requesting the AG to re-evaluate this outcome and consider changing it to ‘partially achieved’ instead. 

Ms Busisiwe Shongwe, Chief Financial Officer: SAWS, took over the presentation, and said SAWS’ total revenue was R407.3 million, which was below their project target of R422.1 million. She attributed this to a drop in the amount of products and services SAWS had intended to sell.

SAWS’ projected expenditure had been R402.1 million, but the actual total was R368.5 million. SAWS had made a request to the Department that their R12 million surplus be turned over and made available to SAWS in order to finance the infrastructure development plan for the 2018/19 financial year. 

Total assets had increased by 5%, from R523 million to R547 million.  Accounts receivable had increased from R26 million to R30 million, which was a concern for SAWS, as it meant that debtors were not paying them. The biggest difficulty SAWS faced in this regard was with one time customers, as it was quite difficult to trace them. The CFO reassured the Committee that SAWS was committed to developing a strategy to resolve this matter.

SAWS total liabilities increased by 16%, from R64 million to R75 million. Specifically, the retirement benefit obligations had decreased from R11.32 million to R4.87 million. The CFO attributed this to a reduction in the beneficiaries, mainly due to mortality.

SAWS had received an unqualified audit opinion from the AG. The findings of regression by the AG included that performance information could not be supported, and some of the key performance indicators (KPIs) were considered not “smart.” found regression within the governance structures, and this resulted in the repeat findings.

Regression in document management was reported, as support documents could not be presented to the AG, whilst others were submitted late. The CFO attributed this to the change in building premises that SAWS undertook this year, adding that she did not foresee SAWS having the same difficulty for the next financial year, as they had now settled into the new building.

Regarding the irregular expenditure finding, SAWS had asked for condonement from National Treasury, as this was related to expenditure from the previous financial year of 2016/17. The CFO expected that by the end of this financial year, this condonement would have been received.

The Chairperson sought clarity on the findings regarding the SAWS SCM, specifically with regard to contracts extended or renewed to circumvent competitive bidding processes. He also asked about the AG’s finding on the preference points system being incorrectly applied. He also sought a further explanation about the fruitless expenditure reported for investigation.

The CFO explained that this was in relation to the total legal fees incurred by the board, which totalled R2.8 million. With R825 000 attributed to the former CEO, and R2 million for the former senior ICT manager, SAWS had requested condonement for R825 000. The remainder was not considered as irregular and fruitless expenditure due to the AG being satisfied with process taken at the time.

With regard to the contracts being extended, the CFO said AGSA had found that it was incorrect for SAWS not to advertise that the contract from the printers could be renewed. Specifically, the contract was for three years and it had been extended for an additional 18 months. The contract was valued at R1 million per annum. 

The CFO clarified the findings of the AG on the preference points system, pointing out that although there was an error made in the awarding of points, there was no financial implication. 

Discussion

Mr Hadebe asked about consequence management. The AG had found that there was fruitless expenditure which was to be investigated.

The Chairperson interrupted to clarify what the CFO had previously explained regarding their submission for condonement.

Mr Purdon agreed that the growth in aviation revenue should be changed from ‘not achieved’ to ‘partially achieved,’ given that SAWS was only R1.24 million short of its target. He requested a further explanation regarding employee compensation, specifically on what the historic trend of this figure was.

The CFO replied that historically, the employee compensation percentage had been around 60%. Furthermore, as a science institution, it was difficult for them to be under the 40% Treasury benchmark. 

The Chairperson asked for information on the state of the SAWS radar equipment and systems.

Mr Ndabambi said that in 2017/18 SAWS had received KPAX funding valued at R37 million. This had not been the case for 10 years. The extra funding allowed SAWS to implement strategies of improvement in maintenance on the radar infrastructure. Following a condition assessment made available by KPAX, SAWS would be implementing a lifetime management programme for the radar system.

Mr Hadebe asked about the preliminary findings of the Public Protector.

Mr Ndabambi said that the suspended CEO, Mr Jerry Lengoasa, had made a follow up with the Public Protector to request that the entire report be released.

The Chairperson referred to remarks at the previous Committee meeting regarding a presentation on
psychological testing. 

Dr Dexter said that they had not met as a board to discuss that matter.

The Chairperson commented that SAWS had not regressed significantly, as in the 2016/17 they had also received an unqualified audit opinion with findings. However, in both 2014/15 and 2015/16, SAWS had received a clean audit. He expressed confidence that the entity could return to receiving clean audits if stability could be restored. He asked for a speedy resolution to the matter of the suspended CEO.


The meeting was adjourned.

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